Paragon sparkles af­ter Mothae stud­ies

PARAGON Di­a­monds Lim­ited on Tues­day said two in­de­pen­dent stud­ies car­ried out on the Mothae kim­ber­lite pro­ject in Le­sotho yielded bet­ter than ex­pected re­sults.

The stud­ies were car­ried out by The MSA Group and the re­sults “ex­ceed man­age­ment’s ini­tial ex­pec­ta­tions,” the com­pany said.

The MSA Group, which is based in Gaut­eng, South Africa, pro­vides ex­plo­ration, ge­ol­ogy, min­eral re­source and re­serve es­ti­ma­tion con­sult­ing ser­vices to the min­ing in­dus­try.

Paragon se­cured the for­mal ap­proval nec­es­sary from gov­ern­ment to com­plete the ac­qui­si­tion and op­er­a­tor­ship of Mothae Diamond Mine early last month from Lu­cara Diamond Corp.

The ap­proval fol­lowed Paragon’s fi­nal­i­sa­tion of an agree­ment on 14 July 2015with Lu­cara Diamond Cor­po­ra­tion to pur­chase its 75 per­cent stake in Mothae for $8.5-mil­lion (about M92.42 mil­lion).

Si­t­u­ated on the south­ern edge of the Kaap­vaal Cra­ton, which hosts the di­a­mon­dif­er­ous north­ern Le­sotho kim­ber­lite field, Mothae Diamond Mine is only five kilo­me­tres from Let­seng mine. Mothae Diamond Mine is 25 per­cent-owned by the gov­ern­ment of Le­sotho.

The stud­ies, which will be used as com­po­nents for the pre-fea­si­bil­ity study and pre-eco­nomic study for the pro­ject, have con­cluded there is po­ten­tial to “sig­nif­i­cantly in­crease” the pro­ject’s net present value from orig­i­nal es­ti­mates and for av­er­age diamond val­ues of up to $2000 per carat.

The stud­ies also have shown an im­proved strip ra­tio of 1:1 from 1.5:1.

The strip ra­tio refers to the ra­tio of the vol­ume of waste ma­te­rial re­quired to be han­dled in or­der to ex­tract some vol­ume of ore. That strip ra­tio means Paragon will have to mine one cu­bic me­tre of waste in or­der to ex­tract one cu­bic me­tre of ore to process.

The re­duc­tion in the strip ra­tio is ex­pected to re­sult in cost sav­ings of $1 to $2 per tonne of ore com­pared to orig­i­nal es­ti­mates, Paragon said.

“Fur­ther cost re­duc­tions could re­sult from us­ing ex­ten­sive X-ray trans­mis­sion re­cov­ery tech­nol­ogy to re­duce wa­ter and power con­sump­tion and waste gen­er­a­tion and at the same time more re­li­able re­cov­ery of large di­a­monds with re­duced break­age,” it added.

The stud­ies also an­a­lysed sev­eral min­ing sce­nar­ios, in­clud­ing the prospect of min­ing 2.0 mil­lion tonnes of ore per year to pro­duce 40 000 carats.

The pro­ject is thought to have over 20 mil­lion tonnes of ore, sug­gest­ing over a 10-year mine life.

Paragon still re­quires fund­ing to com­plete the Mothae ac­qui­si­tion. The miner is al­ready in the process of se­cur­ing fund­ing for the nearby Lem­phane pro­ject and, on Tues­day, Paragon said it may com­plete a fund­ing deal for both Lem­phane and Mothae.

Paragon has al­ready struck a con­di­tional fund­ing deal with In­ter­na­tional Tri­an­gle Gen­eral Trad­ing LLC for Lem­phane, but said a deal that would cover both projects may be with another party if the terms are more at­trac­tive.

“Sub­se­quent to the new and pos­i­tive con­fir­ma­tions pro­vided by The MSA Group re­ports on Mothae, the board has been in­ten­sively and pos­i­tively re­fin­ing the com­pany’s fund­ing op­tions with po­ten­tial fi­nanc­ing part­ners from an en­hanced com­mer­cial po­si­tion,” it said in a state­ment.